UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________ Commission File Number 0-51481 STRATA SKIN SCIENCES, INC. (Exact name of registrant as specified in its charter) Delaware (State or other j ...

Financial Data and Key Metrics Changes - Second quarter revenue was $9.1 million, reflecting a 23% year-over-year growth, including a one-time capital equipment sale in China of approximately $1 million [9][29] - Equipment revenues for the second quarter were $3.5 million, an 83% increase compared to $1.9 million for the second quarter of 2021 [29] - Recurring revenues in the second quarter were $5.6 million, a 2% increase over the second quarter of 2021 [31] - Overall gross profit for the second quarter was $5 million or 55% of revenues, compared to $4.8 million or 65% of revenues for the second quarter of 2021 [31] - Net loss for the second quarter of 2022 was $1.9 million, compared to net earnings of $1.1 million for the second quarter of 2021 [35] Business Line Data and Key Metrics Changes - Domestic XTRAC installed base increased to 915 devices, up from 903 at the end of Q1 2022 [10] - High volume accounts contributed 54% of total gross domestic recurring revenues in Q2, up from 51% in Q2 2021 [12] - The company plans to deploy 15 to 20 XTRAC Momentum machines by year-end, focusing on high volume customers [13][42] Market Data and Key Metrics Changes - The company is targeting the $5.5 billion acne treatment market with the launch of TheraClearX, a noninvasive in-office procedure [16] - Internationally, the company received a one-time payment of approximately $1 million from a capital equipment sale in China, reinforcing its strategy to offer flexible models to international customers [23] Company Strategy and Development Direction - The company continues to focus on high volume accounts, which are critical for revenue generation [12] - STRATA is expanding its portfolio and entering new markets, with a strong emphasis on direct-to-consumer and direct-to-dermatologist marketing [13][27] - The company aims to improve gross margins throughout the remainder of 2022, returning to historical levels in the mid-sixties [32] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for the second half of 2022, expecting full-year revenue growth in the range of 10% to 17% year-over-year [26] - The company is monitoring macroeconomic factors and adjusting commercial strategies as necessary [26] - Management noted that patient levels have returned to normal, although staffing remains an issue in some offices [50] Other Important Information - The company welcomed a new Head of International Sales to enhance its commercial leadership team [24] - STRATA is actively engaging with key leaders in dermatology to support partner clinics and drive product adoption [18] Q&A Session Summary Question: Should we expect the lump from China to normalize back to previous levels for the back half of the year? - Management confirmed that the one-time capital equipment sale was an anomaly and expects normalization going forward [39] Question: Do you expect the ex-U.S. revenue to occur on the recurring side? - Management indicated that Japan has a good recurring revenue model, but other partners are more focused on equipment sales [40] Question: Can you walk us through some of the differences on the Momentum machine? - Management described the Momentum machine as more efficient and faster, allowing dermatologists to see more patients [41] Question: Any updates on the per system metrics for utilization? - Management stated that average recurring revenue per system is around $5,700, with a trend of increasing quarter-over-quarter [49] Question: Any material COVID or staffing impacts in any of your geographies? - Management noted that patient levels have returned to normal, but staffing remains an issue in some offices [50] Question: Any updates on topical Jack inhibitors and their impacts? - Management mentioned that new approvals for atopic dermatitis and vitiligo could drive more patients seeking treatment [53] Question: Is the conversion rate still in the range of 40% to 45%? - Management confirmed that the conversion rate remains in that range and is expected to improve as older machines begin to break down [55]

Revenue Growth - Total revenues for the three months ended June 30, 2022, were $9,105,000, an increase from $7,382,000 in the same period of 2021, representing a growth of approximately 23.3%[140] - Recognized recurring treatment revenue for the three months ended June 30, 2022, was $5,582,000, compared to $5,452,000 for the same period in 2021, reflecting an increase of about 2.4%[142] - The estimated number of treatments for the three months ended June 30, 2022, was approximately 86,000, compared to 78,000 treatments in the same period of 2021, reflecting a growth of about 10.3%[142] - Dermatology procedures equipment revenues for the three months ended June 30, 2022, were $3,523 million, up from $1,930 million in the same period of 2021, representing an increase of 82.6%[145][146] - Total revenues for the three months ended June 30, 2022, were $9,105 million, compared to $7,382 million for the same period in 2021, reflecting a growth of 23.3%[149] Acquisitions - The acquisition of Pharos U.S. dermatology business from Ra Medical Systems, Inc. was completed for an upfront cash payment of $3,700,000, aimed at increasing the recurring revenue base[133] - The acquisition of TheraClear Devices from Theravant Corporation involved an upfront cash payment of $500,000 and potential future earnout payments of up to $3,000,000 based on revenue milestones[134] Market Opportunity - The company estimates that there are approximately 7.5 million people in the U.S. suffering from psoriasis, and up to 125 million people worldwide, indicating a significant market opportunity[127] - The XTRAC system's use for psoriasis is covered by nearly all major insurance companies, including Medicare, enhancing its market accessibility[136] - The company plans to continue executing direct-to-patient advertising programs targeting psoriasis and vitiligo patients to increase market awareness and acceptance[143] Financial Performance - Gross profit for the three months ended June 30, 2022, was $4,993 million, with a gross profit percentage of 54.8%, down from 64.5% in the same period of 2021[149] - Gross profit for the six months ended June 30, 2022, was $9,121 million, with a gross profit percentage of 56.5%, down from 64.2% in the same period of 2021[150] - For the three months ended June 30, 2022, the company reported a net loss of $1,892 million compared to a net income of $1,082 million for the same period in 2021[164] - Non-GAAP adjusted EBITDA for the six months ended June 30, 2022, was $(301) million, a decrease from $(129) million for the same period in 2021[165] Expenses - Selling and marketing expenses for the three months ended June 30, 2022, increased to $4,146 million from $3,160 million in the same period of 2021, marking a rise of 31.0%[157] - Engineering and product development expenses decreased to $209 million for the three months ended June 30, 2022, from $403 million in the same period of 2021, a reduction of 48.2%[156] - Interest expense rose significantly to $208 million for the three months ended June 30, 2022, compared to $26 million in the same period of 2021, an increase of 700%[162] Cash Flow and Working Capital - As of June 30, 2022, the company's working capital was $4,266 million, down from $7,168 million as of December 31, 2021, primarily due to decreases in cash and accounts receivable[165] - Cash and cash equivalents were $10,036 million as of June 30, 2022, compared to $12,586 million as of December 31, 2021[165] - Net cash used in operating activities for the six months ended June 30, 2022, was $409 million, a decline from net cash provided of $387 million for the same period in 2021[169] - Net cash used in investing activities increased to $2,141 million for the six months ended June 30, 2022, compared to $1,466 million for the same period in 2021, primarily due to the asset purchase of TheraClear[170] - The company anticipates that its cash and cash equivalents, along with expected revenues, will be sufficient to meet its working capital needs for at least the next 12 months[168] Credit and Equity Agreements - The company entered into a credit agreement in September 2021, borrowing $8,000 million with a maturity date of September 1, 2026[166] - The company has an equity distribution agreement allowing for the sale of up to $11,000 million of common stock, with no shares sold under this agreement as of June 30, 2022[167] System Placement and Sales - The number of XTRAC systems placed in dermatologists' offices increased to 915 as of June 30, 2022, up from 890 at the end of December 31, 2021, indicating a growth of approximately 2.8%[127] - The company sold 35 systems internationally during the three months ended June 30, 2022, compared to 14 systems in the same period of 2021, indicating a growth in international sales[145][146] Deferred Revenues - As of June 30, 2022, deferred net revenues were $2,501,000, compared to $1,897,000 in the same period of 2021, indicating an increase of approximately 32%[144] - The company recognized approximately $220 million and $620 million of deferred service revenue associated with assumed service contracts from Ra Medical during the three and six months ended June 30, 2022, respectively[145]

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Financial Data and Key Metrics Changes - Revenues for Q1 2022 were $7 million, a 21% increase compared to Q1 2021 [34] - Recurring revenues in Q1 2022 were $5.1 million, an 8% increase over Q1 2021 [35] - Equipment revenues for Q1 2022 were $1.9 million, a 72% increase compared to $1.1 million in Q1 2021 [36] - Overall gross profit for Q1 2022 was $4.1 million, or 59% of revenues, down from 64% in Q1 2021 [37] - Net loss for Q1 2022 was $2.5 million, consistent with a loss of $2.4 million in Q1 2021 [41] - Cash and cash equivalents at March 31, 2022, were $10.9 million, down from $12.6 million at December 31, 2021 [41] - Full year 2022 revenue guidance is expected to be in the range of $33 million to $35 million, indicating strong double-digit growth [42] Business Line Data and Key Metrics Changes - Domestic XTRAC installed base increased to 903 devices, up from 890 at the end of Q4 2021 [13] - High volume accounts contributed $2.4 million or 48% of total gross domestic recurring revenues in Q1 2022, consistent with the previous year [18] - The introduction of the XTRAC Momentum laser is expected to enhance treatment efficiency and improve recurring revenue streams [20] Market Data and Key Metrics Changes - International equipment sales grew 45% in Q1 2022 compared to Q1 2021, reflecting a renewed focus on key regions outside the U.S. [29] - The company plans to leverage the TheraClear acne system in international markets, particularly in Latin America [30] Company Strategy and Development Direction - STRATA is focused on expanding its global footprint in dermatology through commercial execution, partnerships, and acquisitions [11] - The company aims to launch the TheraClear acne system in Q3 2022, targeting the $5.5 billion acne market [26] - Strategies include reengaging high volume accounts and improving marketing campaigns to drive usage among dermatologists [22][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong results for 2022 despite pandemic-related challenges [10] - The company anticipates continued growth in recurring revenues and equipment sales, driven by effective marketing and customer engagement strategies [31] - Management is optimistic about the upcoming TheraClear launch and its potential to drive further adoption of XTRAC treatments [32] Other Important Information - The company is actively pursuing strategies to mitigate supply chain risks and improve cost efficiencies [21] - Management highlighted the importance of customer service and marketing efforts to retain patients and encourage them to complete their treatment regimens [65] Q&A Session Summary Question: Can you discuss the marketing efforts ahead of the TheraClear launch? - Management is preparing for a July launch, conducting market research, and training the sales force [46] Question: What other indications do you think TheraClear would be appropriate for? - TheraClear may be used for hair removal, redness from rosacea, fine lines, and tattoo removals [50] Question: What strategies are being utilized to determine which accounts the sales organization is focusing on? - The focus is on Pharos owners coming off service contracts, with high volume accounts prioritized [51] Question: Can you discuss additional territories for international expansion? - The company is looking to expand in Asia, Australia, and Latin America, with a focus on TheraClear [53][54] Question: Is there an appetite for M&A in the near future? - While focusing on TheraClear and XTRAC growth, the company remains open to opportunistic acquisitions in dermatology [56]

Revenue Performance - Total revenues for the three months ended March 31, 2022, were $7,041,000, an increase of 20.8% from $5,827,000 for the same period in 2021[125]. - Recognized recurring treatment revenue for the three months ended March 31, 2022, was $5,067,000, representing approximately 71,000 treatments, compared to $4,679,000 for approximately 67,000 treatments in the same period of 2021[126]. - Dermatology procedures equipment revenues for the three months ended March 31, 2022, were $1,974,000, up from $1,148,000 in the same period of 2021[129]. - Revenues from dermatology recurring procedures rose to $5,067 million in Q1 2022 from $4,679 million in Q1 2021, with a gross profit percentage decrease to 59.9% from 67.9%[133]. - Revenues from dermatology procedures equipment increased to $1,974 million in Q1 2022 from $1,148 million in Q1 2021, with a gross profit percentage increase to 55.4% from 46.6%[134]. Cost and Profitability - The cost of revenues for dermatology recurring procedures was $2,032,000 for the three months ended March 31, 2022, compared to $1,501,000 for the same period in 2021[131]. - Gross profit increased to $4,128 million for the three months ended March 31, 2022, compared to $3,713 million for the same period in 2021, with a gross profit percentage of 58.6% down from 63.7%[132]. - Non-GAAP adjusted EBITDA improved to $(508) million in Q1 2022 from $(811) million in Q1 2021, indicating a reduction in losses[140]. Expenses - Engineering and product development expenses decreased to $163 million in Q1 2022 from $384 million in Q1 2021, primarily due to reduced costs related to the development of XTRAC MomentumTM 1.0[135]. - Selling and marketing expenses increased to $3,616 million in Q1 2022 from $2,932 million in Q1 2021, driven by investments in sales and marketing and increased employee-related expenses[136]. - General and administrative expenses decreased to $2,652 million in Q1 2022 from $2,789 million in Q1 2021, mainly due to higher compensation and severance costs in the prior year[137]. - Interest expense rose significantly to $199 million in Q1 2022 from $30 million in Q1 2021, attributed to a higher interest rate on the Senior Term Facility[138]. Acquisitions and Business Expansion - The company acquired the Pharos U.S. dermatology business for $3.7 million in August 2021, expanding its customer base to 400 dermatology practices[118]. - In January 2022, the company acquired TheraClear Devices for an upfront cash payment of $0.5 million and potential future payments totaling up to $4.5 million based on performance milestones[119]. - As of March 31, 2022, there were 903 XTRAC systems placed in dermatologists' offices in the U.S., an increase from 890 at the end of 2021[111]. Market and Operational Impact - The company estimates that approximately 7.5 million people in the U.S. and up to 125 million people worldwide suffer from psoriasis, with 1% to 2% of the global population affected by vitiligo[111]. - Deferred net revenues as of March 31, 2022, were $1,971,000, compared to $1,769,000 for the same period in 2021, indicating a favorable impact on revenue recognition[128]. - The ongoing COVID-19 pandemic has negatively impacted operational performance, with staffing issues in physician offices affecting business[117]. Cash Flow and Working Capital - As of March 31, 2022, working capital was $4,627 million, down from $7,168 million as of December 31, 2021, primarily due to decreases in cash and accounts receivable[141]. - Net cash used in operating activities was $353 million for Q1 2022, compared to net cash provided of $153 million in Q1 2021, reflecting changes in asset and liability accounts[145].

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• December 2020 March 2022 Driving Value to Dermatology Partners Matching Patients with Clinics Investor Presentation Safe Harbor Statement 2 This presentation includes "forward-looking statements" within the meaning of the Securities Litigation Reform Act of 1995. These statements include but are not limited to the Company's plans, objectives, expectations and intentions and may contain words such as "will," "may," "seeks," and "expects," that suggest future events or trends. These statements, the Company' ...

Financial Data and Key Metrics Changes - STRATA reported Q4 2021 revenues of $9.1 million, a 35% increase compared to Q4 2020 and a 17% increase over Q3 2021 [11][36] - Full year 2021 revenues reached $30 million, a 30% increase over 2020 [45] - Recurring revenues for Q4 2021 were $6.7 million, a 32% increase year-over-year and a 17% increase sequentially [37] - The net loss for Q4 2021 was $849,000, compared to a loss of $443,000 in Q4 2020 [44] Business Line Data and Key Metrics Changes - Equipment revenues for Q4 2021 were $2.4 million, a 45% increase compared to Q4 2020 [38] - The number of recurring revenue XTRAC devices in the U.S. increased to 890, up from 832 at the end of 2020 [13] - High-volume customers contributed over $3 million in revenues, accounting for 54% of all revenues in Q4 [28] Market Data and Key Metrics Changes - International revenue for the full year grew 28% over 2020, highlighting strong traction through distribution partners [24] - STRATA expanded into Israel, targeting an additional 300,000 psoriasis and 160,000 vitiligo patients [25] Company Strategy and Development Direction - STRATA aims to expand into the $5.5 billion acne treatment market through the acquisition of the Theraclear acne system [18] - The company plans to launch Theraclear in Q3 2022, focusing on leveraging existing relationships with XTRAC partners [22][54] - STRATA is also focusing on enhancing its direct-to-dermatology marketing initiatives to drive XTRAC usage [32] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from the Omicron variant impacting early 2022 revenues but projected a strong year-over-year growth of 18% to 20% for Q1 2022 [15][50] - The company expects full year 2022 revenues to be between $33 million and $35 million, indicating continued growth despite headwinds [50] Other Important Information - STRATA's gross profit for Q4 2021 was $6 million, or 66% of revenues, with expectations for margins to remain stable in the 65% to 70% range [41][43] - The company has made significant improvements in reducing non-revenue-generating devices, ending 2021 with 15% of its installed base non-generating revenue [30] Q&A Session Summary Question: How is STRATA anticipating the rollout of Theraclear in 2022? - Management expects to roll out Theraclear around mid-year, targeting existing XTRAC partners for initial placements [54] Question: Can you provide details on the Momentum 1.0 conversions? - The focus will be on high-volume customers, with plans to refurbish and redeploy older units [58] Question: What is the expected mix of revenue sources for FY 2022? - Management indicated that recurring revenue from existing XTRAC partners and conversions from Ra will be key, with Theraclear contributing in the second half of the year [72] Question: How does geographic revenue concentration look? - The majority of revenue is generated from the East and West Coasts, with a significant presence in the Upper Midwest [78]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 0-11635 STRATA SKIN SCIENCES, INC. (Exact name of registrant as specified in its charter) | Delaware | 13-3986004 | | --- | --- | | (State or Other Jurisdiction of | (I.R.S. Employe ...